Economy

TOKYO (Reuters) – Japanese manufacturers’ sentiment recovered in January after a dip last month thanks to better conditions for materials industries, but their outlook remains flat due to uncertainty over proposed Trump policies, the Reuters Tankan poll found.The improving business confidence is positive for the Bank of Japan’s (BOJ) view that wage-driven economic growth will lead to stable inflation around its 2% target and justify a further rate hike as early as its next policy meeting on Jan. 23-24.The survey of 505 non-financial major Japanese firms found manufacturers’ mood rising to plus 2 in January from the previous month’s minus 1, which had marked the first negative reading in 10 months.The Reuters Tankan indexes are calculated by subtracting the percentage of pessimistic respondents from optimistic ones. For the latest survey, 235 firms responded on condition of anonymity between Dec. 24 and Jan. 10.The recovery in mood was most conspicuous among upstream industries such as steel, oil refinery and chemicals thanks to a pick-up in global demand, while machinery sectors such as autos and electronics saw their sentiment deteriorating in January.On a three-month-ahead outlook, manufacturers’ level of confidence is seen unchanged at plus 2 in April.Even among sectors that turned more optimistic, respondents cited some worrisome factors that kept their outlook neutral.”While the plant-related business remains robust, there are fears the automotive parts business will suffer from Japanese automakers’ struggles in China and Southeast Asia. The semiconductor-related business is also facing a delayed recovery in market conditions,” a manager at a ceramics company wrote in the survey.Domestic demand in Japan remains weak, multiple chemical firm managers said.The ambivalent views echo BOJ’s own tankan poll result in December, which showed a slight improvement in the current conditions but a deteriorating outlook.Managers remained unsure about the future of U.S. government policies, particularly on international trade, with President-elect Donald Trump taking office on Jan. 20.”It’s difficult to take any action now given the uncertainty about what policies will be implemented and whether tariffs will really be increased,” wrote a manager of a machinery maker.Meanwhile, the service-sector index inched up to plus 31 in January from 30 in the month prior. The index is expected to stay flat at 31 in April.”With high domestic consumer confidence, the number of customer visits, including inbound tourists, is growing steadily,” wrote a retail company manager.A manager at a construction firm said there has been some progress in passing on costs to service prices to secure profits despite a labour shortage.Recent data showed wage hikes broadening in Japan with the inflation rate staying above BOJ’s 2% target, cementing market expectations that an interest rate hike is possible in the near term, even as consumer spending and factory output remain soft. More

The money was left over from SAC’s $602 million settlement in March 2013 with the U.S. Securities and Exchange Commission over trades in drugmakers Wyeth and Elan by Mathew Martoma, who worked at an SAC unit and was later convicted.Pfizer said it deserved the $75.2 million because a neurologist who tipped Martoma about a 2008 Alzheimer’s drug trial owed a fiduciary duty to Wyeth, which Pfizer bought in 2009, because he had been a consultant there.U.S. District Judge Victor Marrero in Manhattan, however, ruled in November that Wyeth was not a victim of Martoma’s trading, and thus Pfizer was not entitled to funds left over after Wyeth and Elan investors who lost money were compensated.Pfizer appealed Marrero’s decision to the 2nd U.S. Circuit Court of Appeals in Manhattan. The appeals process often takes several months or longer.Cohen was not criminally charged. He changed SAC Capital’s name to Point72 Asset Management in 2014, and is now worth $21.3 billion according to Forbes magazine. More

Beginning in February, the rate, known as the crawling peg, will slow to 1% per month from a prior rate of 2% due to “the consolidation observed in the inflationary trajectory during the last few months, and in the expectations of a decrease in inflation,” the central bank said in a statement.Investors say the slower crawling peg for the peso could prolong a market rally that has been fueled by the pro-market policies of President Javier Milei and hopes for fresh IMF funds.Milei, who took office in December 2023, has launched a nationwide austerity push, slashing many public budgets. While poverty rates have increased, price rises have steadily slowed down from eye-popping double-digit increases each month.The central bank’s announcement came about an hour after official data showed that monthly inflation ticked up a tad in December, though the annual rate slowed further as Milei pushed tough spending cuts and austerity measures.”We’re pulverizing inflation,” Argentina’s economy ministry said in a post on X.The monthly rate, which came in at 2.7% as forecast by analysts, meant South America’s second-largest economy ended Milei’s first full year in office with annual inflation of 117.8%. The rolling 12-month rate has been slowing from an April peak near 300%.Still, many Argentines feel the pinch to their wallets, with housing and utility costs leading the December price increases.”People say inflation is going down, but here we always receive merchandise with different prices, it goes up and up,” said 77-year-old retiree Juan Carlos Gonzalez, who works at a produce stand to make ends meet.Analysts said seasonal price rises were behind the slight acceleration from the 2.4% monthly inflation logged in November, and markets greeted the data as good news. Traders expect inflation to keep cooling in 2025.The December data “confirms the disinflation process is continuing,” Economy Minister Luis Caputo said on X.WHAT’S NEXT?Traders have been betting that Argentina’s central bank will also cut the interest rate from its current 32%. The central bank is expected to cut the interest rate by around 500 basis points, brokerage Max Capital said ahead of the inflation data’s release on TuesdayWhile the central bank board meets every Thursday, a rate cut could come ahead of a Treasury tender on Wednesday, the company added. More

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Argentina’s libertarian President Javier Milei is slowing the monthly devaluation of the peso, extending an unorthodox currency policy that he says is essential to ending the country’s inflation crisis.Milei last year allowed the peso’s official exchange rate to weaken by just 2 per cent a month, or 22.8 per cent over the year, despite consumer prices rising 117 per cent in 2024 compared with 2023. That caused the peso to appreciate more than any other currency in real terms last year, fuelling concerns about the competitiveness of Argentine businesses among some economists.The so-called crawling peg devaluation will slow to 1 per cent a month starting in February, Argentina’s central bank said on Tuesday.The move aims to consolidate a dramatic fall in monthly inflation that has been Milei’s biggest achievement since he took office amid a dire economic crisis in late 2023.The month-on-month inflation rate has fallen from a peak of 26 per cent in December 2023 to 2.7 per cent in December 2024, largely thanks to Milei’s sweeping austerity programme. Authorities argue the 2 per cent devaluation has become one of the main drivers of continued price pressures.“With the attention set on midterm elections [in late 2025], where Milei-backed candidates will likely perform well, officials want to ensure that inflation remains under control,” said Luciano Sigalov, an analyst at Bull Market Brokers in Buenos Aires.Milei has described slowing the devaluation as an important step on the road to removing Argentina’s strict currency and capital controls, a top concern for foreign investors, which he has pledged to do in 2025.However, the slower crawling peg will also hasten the real appreciation of the peso and delay the rebuilding of Argentina’s central bank negligible foreign currency reserves, which “the market has identified as the biggest risks of Milei’s programme”, said Nery Persichini, head of research at financial services firm GMA Capital.Rapid real peso appreciations under previous Argentine governments have ended in abrupt devaluations and economic turmoil, when the central bank ran out of cash to prop up the strong currency.Milei has argued that a faster devaluation of the peso would set off a fresh bout of inflation, derailing the successful macroeconomic stabilisation that allowed Argentina to emerge from a recession in the third quarter of 2024.He says Argentina must retain competitiveness by deregulating the economy and lowering taxes and corporate borrowing costs, rather than devaluing the currency.The weakening of the real in neighbouring Brazil and low global prices for Argentine exports such as soy, which could hurt export revenue, as well as the strengthening of the US dollar, will put more pressure on Milei’s currency strategy in the coming months, Persichini said.“But the government’s success on inflation has [saved] Argentina from a bigger crisis and that’s what they want to keep prioritising,” he added. “They believe this is a risk worth taking, and it’s a risk they can manage.” More

New Zealand is the latest country to sign an economic partnership with the United Arab Emirates.
New Zealand’s prime minister told CNBC that the South Pacific island nation has to look beyond its own backyard for trade opportunities.
The free trade agreement signed on Monday between New Zealand and the UAE is seen by Prime Minister Christopher Luxon as a chance to expand bilateral trade between the countries.

Cattle photographed in New Zealand. Agriculture plays a major role in New Zealand’s economy, especially when it comes to exports.
David Clapp | Stone | Getty Images

New Zealand’s prime minister told CNBC the country has to look beyond its own backyard for trade opportunities, as the South Pacific island nation signs an economic partnership with the United Arab Emirates (UAE).
The free trade agreement, known formally as the Comprehensive Economic Partnership Agreement (CEPA), is seen by Prime Minister Christopher Luxon as a chance to expand bilateral trade between the countries and makes the UAE one of the island’s largest markets in the Middle East.

“We’ve had a long-standing relationship over 40 years of diplomatic recognition, and really the chance now for us is to deepen and to broaden the economic relationship,” Luxon told CNBC Monday.
“That’s why the signing of the CEPA and also the bilateral investment treaty is really important, because actually these are two small advanced economies in the world that actually have a lot in common and alot of common values, and we want to be able to work together and build out that relationship.”
New Zealand’s key exports to the UAE include dairy, industrial products, meat, horticultural products and travel services, the government said as it announced the deal. The agreement, expected to come into force later this year, comes as the government aims to double the value of exports in 10 years. It said the CEPA will mean that 99% of New Zealand goods exporters are able to access the UAE market duty free.
“This includes all New Zealand’s dairy, red meat, horticultural and industrial products immediately when the Agreement enters into force,” it noted. 
“One in four of our jobs in New Zealand are tied very much to trade,” Luxon, head of the center-right New Zealand National Party who’s been in power since late 2023, told CNBC’s Dan Murphy in Abu Dhabi Monday.

“When you see a New Zealand company that’s exporting out to the world, it’s able to pay its workers7% higher salaries and wages, and they’re often our more productive companies. The message to people at home is that they understand that we are a trading nation. We don’t get rich just selling stuff to each other in the South Pacific or within New Zealand,” he said.
“We actually need to send out great products and services out into the world, of which there’s huge demand for, and make sure we open up new markets like the Middle East to actually get those products too. In doing that, we bring more money back at home, and that, obviously, is the way in which we can afford better public services like health and education,” Luxon added.
New Zealand is in need of an economic boost after its economy contracted last year and entered recession territory in the third quarter. The economy shrunk by 1% in the July-September quarter, data released in December showed.
The fall followed a 1.1% contraction in the previous quarter. Two straight quarters of negative growth is widely considered a technical recession.

WELLINGTON, NEW ZEALAND – NOVEMBER 03: Incoming Prime Minister and National Party leader Christopher Luxon speaks during a media stand-up at Parliament on November 03, 2023 in Wellington, New Zealand. Special votes cast overseas and by mail were certified on Friday, finally sealing the results of New Zealand’s general elections. The Labour party was soundly defeated by the National Party, led by Christopher Luxon, winning the most votes. National will however need the support of both ACT and NZ First parties to form the next coalition Government. (Photo by Hagen Hopkins/Getty Images)
Hagen Hopkins | Getty Images News | Getty Images

Luxon said there was no doubt that the past three years had been “a very challenging time” for the country, but said inflation, at 2.2% in October, was under control and interest rates were coming down. The country’s central bank has flagged that further easing is to come at its next meeting on Feb. 19.
“We’ve got business confidence at a 10-year high. We’ve got consumer confidence at a three-year high. We’ve got farmer confidence the highest it’s been since 2017 so we know we’ve got the conditions that people are believing there’s a better future,” he added.
“Now we’ve got to convert and really drive into growth, and that’s where these stronger international trading connections are, but also encouraging inbound investment to New Zealand as well.”
Asked how he felt about Donald Trump returning to power in the U.S., and the possibility of tariffs on exports to the States as the president-elect has widely signaled (with a potential universal tariff of 10% or 20% on all goods imported to the U.S.), Luxon said he was in “wait-and-see” mode.
“We’re going to work well with whichever Administration the Americans select, and they’veselected Donald Trump and the Republican Administration. And I’ve got every confidence we’ll work very constructively with them. We’ll have to wait and see as to what is the tariff policy in terms of how it actually does get played out, or what gets played out,” he said. More

The import price index, in terms of local currency, rose 7.0% in December from a year earlier, the fastest since last July, according to the Bank of Korea.It was the second consecutive month of gains in import prices, which affect consumer prices with a time lag, after a rise of 2.8% in November. The won ended December down 5.2% against the dollar, marking its largest monthly decline in 22 months, after reaching its weakest level since March 2009 due to domestic political turmoil. Last month, South Korea’s consumer inflation quickened to 1.9%, exceeding market expectations and near the BoK’s 2% target, with the central bank flagging a possibility of inflation accelerating further this month. The BoK is expected to lower interest rates by a quarter percentage point to 2.75% on Thursday, a month earlier than previously anticipated, to support a struggling economy amid risks from political uncertainty.The export price index rose 10.7% last month, also the fastest in five months, after climbing 7.0% in November. More

(Reuters) -Prime Minister Justin Trudeau, facing disagreements over how Canada should respond to threatened U.S. tariffs, will hold a cabinet retreat next week focused on defending Canadian interests, his office said on Tuesday.U.S. President-elect Donald Trump has promised to impose a 25% tariff on imports from Canada, which economists say would trigger a deep recession. Canada sends 75% of all exported goods and services to the United States. “Cabinet will protect and defend Canadian interests, strengthen Canada’s relationship with the U.S., and make unequivocally clear the mutually beneficial trade and security relationship the two countries share,” Trudeau’s office said.Trudeau, who will step down as prime minister in early March, is promising countermeasures if Trump carries out his threat and wants a united response from the federal government and 10 provinces. But splits are emerging and some provinces are unhappy with what they see as a lack of leadership from Ottawa.”The federal government … need to get their act together,” Ontario Premier Doug Ford (NYSE:F) said. Ontario, the most populous province and Canada’s industrial heartland, could lose up to 500,000 jobs if tariffs are imposed, he said.The premiers are due to meet Trudeau in Ottawa on Wednesday to discuss the potential tariff response.”We can’t have a divided Canada. We have to make sure we all stick together,” Ford told reporters.On Sunday, Foreign Minister Melanie Joly said Canada was not ruling out curbing energy exports to the U.S.But Danielle Smith, premier of oil-producing Alberta, predicted there would be a national unity crisis if Ottawa tried to shut off crude exports.”We won’t stand for that,” Smith said on Monday after meeting Trump in Florida. “I can’t predict what Albertans would do.”The Jan. 20-21 cabinet meeting will coincide with Monday’s inauguration of Trump, who is unhappy at what he says is lax security on the joint border. He has also mused about making Canada the 51st state.Canada responded by unveiling a C$1.3-billion ($909 million) border-security plan, with an emphasis on surveillance, intelligence and technology. More